American Contract Law for a Global Age, 2017a

When Hurricane Rubin strikes the local community, the storm causes a breach
in the levee system that protects the community. A storm surge inundates the
neighborhood and Homeowner’s house is destroyed. Homeowner argues that the levee
was negligently designed and maintained, and that her loss was caused by this
negligence, not by the storm. Arcturus argues that the levees were wrecked by “tidal
water” and “wind” and that the house was inundated by water, which by definition
means “flood.” Is the loss covered by Arcturus’s policy? Why or why not?
Problem 18.3
Giada has negotiated a restaurant lease with Lessor to open her new
restaurant. The restaurant has both gas and electric lines running into it, and at the
time the building is leased it has a non-functional and non-repairable gas cooking
range. The lease provides:
The Lessor shall furnish free to and for the use of the Lessee in
connection with the use and occupancy of the premises, herein demised,
electric power, electric light, heat, electric light bulbs . . . . but [Giada] shall
pay for all gas or fuel used in the preparation of food.
Giada installs a new electric range and various microwave and electric
convection ovens. When Lessor gets the electric bill, it refuses to pay for the electricity
used in cooking because it is “fuel used in the preparation of food.”
What are the arguments both parties could raise on interpreting that phrase?
Is either side’s position stronger than the other’s?
Problem 18.4
Delta Barge Co. is a company in the business of transporting bulk cargoes
(grain, coal, stone, bulk chemicals, scrap metal, etc.) on the Mississippi River through
its fleet of barges and tugboats. Delta has a policy of insurance with Inland Marine
Insurance that covers its barges and cargoes. The policy specifically excludes coverage
for loss caused by “fire or explosion,” but covers all losses resulting from “perils of the
river.” When one its barges, carrying tanks of kerosene, accidentally rams a sunken
obstruction, it begins to take on water. Worse, the accident ruptures the kerosene
tanks and the liquid spills out, catching fire. Ultimately one of the kerosene tanks
explodes, destroying the barge and all its cargo. Delta files a claim, which Inland
denies. Is the loss covered by the Inland policy?
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380 CHAPTER VI: TERMS AND INTERPRETATION